By Darryl Browne -
Snapshot
- There are various reasons why the distribution of an estate will not always be made in accordance with the terms of a will.
- Testamentary offsets—equitable principles adjusting the interests of a fiduciary who breaches its obligations—are one reason. Principles to avoid double dipping, such as ademptions and hotchpot, are another.
- This article discusses these principles with reference to their recent application by the Full Federal Court in HBSY v Lewis.
An executor and administrator must swear to distribute the deceased’s estate according to law. That does not always mean the distribution will be made in accordance with the terms of the will. There are a multitude of reasons why the term ‘according to law’ can produce a different result than the term ‘pursuant to the will’. Leaving aside the rules of construction (including the equitable presumption rule) and circumstances which lead to rectification of a will, these reasons include satisfaction of debt, ademption, appropriation, assignment, bankruptcy, disclaimer, abatement, hotchpot, the ‘rule’ in Saunders v Vautier [1841] EWHC Ch J82, forfeiture and modification of the forfeiture rule.
Another reason is ‘testamentary offsets’ which occur when applying the ‘rule’ in Cherry v Boultbee (1839) 4 My & Cr 442 (‘Cherry v Boultbee’). Cherry v Boultbee and other examples of testamentary offsets were examined by the Full Court of the Federal Court in HBSY Pty Ltd v Lewis (No 2) [2025] FCAFC 44 (‘HBSY v Lewis’). This article considers HBSY v Lewis and some other situations which may have a similar effect as a testamentary offset, such as some ademptions and hotchpot.
